Marketing

Pages: 29 (7218 mots)Publié le: 16 juillet 2010

Rethinking Marketing Programs for Emerging Markets
Abstract

We point to a fundamental inconsistency in the emerging market strategies of multinational firms. On the one hand, they seek billions of new consumers in the emerging markets of China, India, Indonesia, and Latin America; on the other, their marketing programs are scarcely adapted for these markets. The result is low marketpenetration, low market shares, and poor profitability. These multinationals are trapped by their own devices in gilded cages, serving the affluent few and ignoring the potential of billions of new consumers that attracted them in the first place. In this paper, we propose that, in order to attract billions of new consumers, the marketing programs of multinationals need to be rethought from the groundup. We identify three key factors that characterize emerging markets: (1) low incomes, (2) variability in consumers and infrastructure, and (3) the relative cheapness of labor, which is often substituted for capital. We draw on numerous case studies from around the world to illustrate how to incorporate these realities into marketing programs. We conclude with a discussion of the implications ofsuch an approach for the multinational’s core strategic assumptions.

Rethinking Marketing Programs for Emerging Markets

1.0 Introduction
Lured by the prospect of one billion breakfast eaters, Kellogg, the U.S. cereals giant, ventured into India in the mid- 1990s. Three years afler entering the market, sales stood at an unimpressive $10 million. Indian consumers were not sold on breakfastcereals. Most consumers either prepared breakfast from scratch every morning, or grabbed some biscuits with tea at a roadside tea stall. Advertising positions common in the west, such as the convenience of breakfast cereal, did not resonate with the mass market. Segments of the market that did find the convenience positioning appealing were unable to afford the international prices of Kellogg’sbrands. Disappointing results led the company to re-examine its approach. Last year Kellogg finally realigned its marketing to suit local market conditions: they introduced a range of breakfast biscuits under the Chocos brand name. Priced at Rs. 5 (1 0 U.S. cents) for a 50-gram pack, and with extensive distribution coverage that includes roadside tea stalls, they are targeted at the mass market andexpected to generate large sales volumes. Like Kellogg, many multinationals rushed in to emerging markets over the past decade, agog at the potential of billions of new consumers who had been liberated from planned economies and protectionist barriers. But as the initial euphoria wanes, there is a growing realization that the billions of consumers have not reciprocated the multinationals’ embrace;that local competitors are stronger than expected; and competition for the top tier of the market is fierce, as major players from around the world compete for the same limited pie. Multinationals’ stance is rapidly evolving from one of “exploration,” “investment,” and “establishing a beachhead,” to more prosaic reasons such as “generating a return,” “growing long term sales volume,” and “buildinga dominant position.” Local subsidiaries are being called to account, and losses that may earlier have been viewed as investments

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in market building, are no longer tolerated. Local operations now realize that the three to five
percent of consumers in emerging markets who have global preferences and purchasing power no longer suffice as the only target market. Instead, they must delvedeeper into the local consumer base in order to deliver on the promise of tapping into billion-consumer markets.’ This calls for a shift in emphasis from the “global” to the “local” consumer, and from globally standardized to locally adapted marketing programs. Most multinationals have long resisted targeting the local consumer, preferring instead to transplant offerings that were developed for...